U.S. stocks extended losses in late trade to end lower on Friday, as weakness in technology and consumer staples shares offset the latest batch of corporate earnings, which largely continued to beat expectations.
The selling pressure intensified as the yield on the 10-year Treasury note hit a more-than-four-year high. The main benchmarks still posted modest weekly gains, however.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.82% fell 201.95 points, or 0.8%, to 24,462.94 but ended the week 0.4% higher.
The S&P 500 SPX, -0.85% declined 22.99 points, or 0.9%, to 2,670.14 with ten of the 11 main indexes ending with losses. Consumer staples and technology sector were hit the most, falling 1.7% and 1.5%, respectively. The benchmark index still posted 0.4% gain over the week, however.
The Nasdaq Composite Index COMP, -1.27% dropped 91.93 points to 7,146.13, a decline of 1.3%. Over the week, the tech-heavy index rose 0.5%.
What’s driving markets?
While earnings were the primary driver of sentiment earlier in the week, investors lately grew concerned about a jump in bond yields that reflect rising inflation expectations.
The 10- year Treasury note yield TMUBMUSD10Y, +1.67% rose 4.4 basis points to 2.956% on Friday, the highest since January 2014.
What are strategists saying?
“Had bonds yields risen because the underlying economy is accelerating, then, we would see higher stock prices too. But Friday’s weakness in stocks suggests that investors sold Treasurys because they are concerned that wage pressures and protectionist policies of the White House administration would send inflation higher,” said Kristina Hooper, chief global market strategist at Invesco.
“Stock prices have been very sensitive to bond yields lately, selling off each time the 10-year yield reaches some milestone,” Hooper said.
Volatility in the commodity market also added to uncertainty.
“I think a lot of people are clueless about what the next $10 move will be for oil, whether it will be up or down, and this adds to the level of uncertainty in the market, which was already pretty high,” said Chris Bertelsen, chief investment officer of Aviance Capital Management.
What stocks are in focus?
GE GE, +3.93% shares rose 3.9% after it reported adjusted earnings that beat Wall Street forecasts, and reaffirmed its guidance. Despite the gain, the industrial conglomerate remains the worst performing Dow component over the past year, a period over which it has shed about 50% of its value.
Baker Hughes BHGE, +0.83% reported adjusted earnings that topped expectations, but revenue that was slightly under forecasts. The stock rose 0.9%.
Apple Inc. AAPL, -4.10% tumbled 4.1% after a pair of analysts issued cautious notes ahead of the company’s second-quarter earnings report, due out in early May. The stock was one of the biggest drags on the overall market.
Honeywell International Inc. HON, +1.65% rose 1.6% after reporting its first-quarter results and raising its outlook.
Schlumberger Ltd. SLB, -1.49% fell 1.5%. The oil giant topped earnings estimates, but said it expects the sector to see supply challenges this year.
Atlassian Corp. PLC TEAM, -6.53% shares fell 6.5% after the software maker reported earnings late Thursday.
State Street Corp. STT, -4.34% STT, -4.34% fell 4.3% despite better-than-expected earnings and revenue.
Twitter Inc. TWTR, +1.17% shares rose 1.2% after MKM Partners lifted shares to buy from neutral.
Pivotal Software Inc. PVTL, +4.87% rose 4.9% in its trading debut, after its initial public offering was priced at $15 a share. The cloud-software company is majority controlled by Dell Technologies Inc. and VMware Inc. VMW, +0.34%
What are other markets doing?
European stocks SXXP, -0.03% ended a volatile session marginally lower. Asian markets CLK8, -0.04% also finished lower, as chip-related stocks got hit.
Gold futures GCM8, -0.83% posted a second week of losses, after settling 0.8% lower at $1,338.30 an ounce on Friday.
The ICE U.S. Dollar Index DXY, +0.40% climbed to an 11-day high, boosted partially by higher Treasury yields.
Oil prices settled with a modest gain Friday, shaking off earlier weakness sparked by a tweet from U.S. President Donald Trump.
